nothin Builder To Mayor: Give Me 45 Days | New Haven Independent

Builder To Mayor: Give Me 45 Days

Paul Bass Photo

Developer Max Reim’s last public sighting, in 2015; newly released emails show him at odds with the city.

The missing-in-action Montreal developer who is years late on starting to build on the old Coliseum site promised the city he’ll finally have some happy” news by early September.

Mayor Toni Harp offered that update on her latest appearance on WNHH FM’s Mayor Monday” program.

She said she met in City Hall the week before last with principals Bill and Max Reim of LiveWorkLearnPlay, the development firm that bought the city-owned parking lot where the New Haven Coliseum once stood on 5.5 acres at Orange, George, and State Streets and Martin Luther King Jr. Boulevard. LWLP promised to build a $400 million new urbanist mini-city there with 1,000 mixed-income apartments, 30 – 40 new businesses, a four-and-a-half-star hotel with 160 – 190 rooms, 30,000 square feet of stores, and a public square.

LWLP’s own website boasted (as recently as last May) that the firm would begin construction in Spring 2015.”

Not only has LWLP not put shovels in the ground. More than five years after signing a development deal with the city, it hasn’t even produced a final drawing or announced the selection of a hotel operator. Or shown any signs of actually having the financing to pursue the project.

As other builders have rushed to erect new complexes within blocks of the prime downtown property, the Harp administration and LWLP have remained at an impasse, laying the groundwork for a possible court fight over broken promises, newly released email correspondence reveals. (More about that later this story.)

Harp said Monday that in their meeting the Wednesday before last, the Reims didn’t offer specifics about whether they’ve actually found a partner or buyer to finance the project. But they made a new promise, she said.

They wanted us to know that they hadn’t given up on the project yet. But they would let us know in about 45 days whether or not it’s a go. They still thought New Haven had all of the elements that interested them in the first place,” Harp said.

Harp said the Reims told her it has proved far more difficult to find the financial partners for them than they expected.” But they left her with this message, she said: We’re still interested. You’re going to be happy in 45 days. …They felt that they were very close.’”

Max Reim failed to respond to requests for comment for this story. After a couple of years of speaking publicly about the project, he has refrained from discussing it, at least in the media. Behind the scenes, he has blamed the city for breaking its word to him and losing him millions of dollars” already, while the city has in turn accused his company of failing to live up to its obligations under the original development and land disposition agreement (DLDA).

Happier Daze

Reim, Mayor John DeStefano, then-alder board President Jorge Perez sign the LWLP Coliseum deal in December 2013, as Mayor-Elect Harp looks on.

Reim signed that DLDA with the city in December 2013 during the final weeks of the former DeStefano administration, which negotiated the deal. (Click here to read the DLDA.)

He was the toast of the town: Elected officials, preservationists, alders and other activists who often clash about development projects swooned over his promises to please all sides with the ultimate new-urbanist project.

Under the radar, some in the trade grumbled that Reim won the competition to buy the city land by overpromising, by putting together a project that would never receive private financing, and that was beyond LWLP’s ability to pull off.

The administration of Dannel P. Malloy shared that skepticism. It refused to release a promised $21.5 million in state financing for road configuration until LWLP produced evidence of having lined up a hotel chain to operate a luxury facility on the site. Which it has yet to do all these years later, despite repeated assurances that it was close to a deal with one of several interested parties.

But for years Reim continued winning praise and speaking publicly as he signed architect Herb Newman to the team.

By 2015 Reim’s retreated to public silence, with no hotel operator or financing in evidence. He and city officials wrestled with how or whether to reconfigure the project when it turned out that a key part of the original plan — that utility lines could easily be moved as part of the road work — turned out far more complicated and expensive than expected. It would require another $15 million and a court fight with United Illuminating. The city pushed for LWLP to place the putative hotel on another part of the block to obviate the need to move the utilities; LWLP began privately blaming its failure to land a hotel operator or obtain financing on the utility problem.

A debacle,” the Reims wrote in an email message: an impasse which we did not create, but one which in the end has caused us significant losses, which .… the City now chooses to completely ignore.”

While the Reims blamed New Haven for making it harder to find partners and investors to build in New Haven, other developers went on a tear doing just that: Four separate projects were begun or completed on a single block of College and Crown streets three blocks away from the Coliseum site, while a Fairfield County developer snapped up four nearby properties to begin work on a total estimated quarter billion dollars worth of construction, including one of four separate boutique hotels in the works. Among numerous other projects within walking distance of LWLP’s property.

By mid-2017, even while city Economic Development Administrator Matthew Nemerson was still publicly alleging that the project remained on track, the Harp administration gave LWLP a June 30 deadline to produce some workable plans needed for the state to make road work money available. LWLP did not produce any.

We were close to saying, Look this is a wrap. This is some of the most important property in our city. We have to find a developer who can” build there, Harp said on Monday’s radio show.

Instead, in email exchanges, Nemerson and the Reims accused each other of failing to live up to legal obligations while insisting their side has lived up to its obligations. They even disagree, for the record, about what they discussed with each other in private meetings.

The text of the emails, obtained under the Connecticut Freedom of Information Act, follow.

Nemerson’s Letter

Happier site: Development Administrator Matthew Nemerson at this month’s Audubon Square groundbreaking.

June 14, 2017

Live Work Learn Play New Haven LLP
c/o Live Work Learn Play, Inc.
147 St. Paul West, Suite 100
Montreal, Quebec, Canada H2Y IZ5
Attention: Max Reim, Bill Reim and Rony Karan

RE: Coliseum Redevelopment and Land Disposition Agreement

Dear Max, Bill and Rony:

Thank you for your letters of April 27, 2017 and June 1, 2017 and I acknowledge as well our telephone conversations of May 7, 2017 and May 23, 2017.

Let me start by saying I believe that the tone and interpretation of past events contained in your correspondence do not accurately reflect the true positive spirit and ideas coming out of our March 23, 2017 meeting with Mayor Harp and [state Deputy Economic Development Commissioner] Tim Sullivan. So, allow me to respond positively in the hopes of re-centering the dialogue and maintaining progress on this exciting collaboration between our community and your team.

In July 2016, I traveled to Montreal specifically to inform you that we had reached an impasse with UI concerning the bike/pedestrian corridor and relocation of the UI utility lines. In October 2016 we met again and resolved to further explore a project with no Additional Property” (as defined in the DLDA) or to open a dialogue about termination of the DLDA in the event that you determined that a project without any Additional property was not feasible.

As you are aware, there is no obligation in the DLDA to deliver Additional Property”. The obligation of the City, as detailed in the DLDA, is to deliver the site of the former Coliseum building and to discontinue South Frontage Road so as to add the northerly portion of the road to this original site.

I am as disappointed as you that it was not possible to reach a satisfactory outcome with UI concerning the utility lines. Clearly, if the utilities were relocated to make way for the new bike/pedestrian corridor, then, assuming the cooperation of the State as regards the State’s portion of South Frontage Road and the adjacent land abutting Route 34, the combined effect would have provided a continuous stretch of usable Additional Property” for the purposes of the hotel project as previously envisioned.

However, despite this setback, Live Work Learn Play New Haven (“LWLPNH”) continued to report forward progress based upon the contours of the original site described in the DLDA, and an eagerness on your part to present the plan in person and directly to the Mayor and Tim Sulllivan. Reference is made to telephone conversations on November 30, 2016, January 11, 2017, January 31, 2017 and March 21, 2017?

Which brings us to the meeting of March 23, 2017 at which you announced you were prepared to begin construction on a single-phase project as early as this Fall (September-December 2017). We proceeded to discuss, in some detail, the specific things that would need to take place as part of any normal course of due diligence to meet that schedule, or more likely, a Spring 2018 start of construction.

At this time, I do not consider it appropriate to revise the meeting record, particularly as regards any alleged claims for compensation, not least because the potential for any such claims was not discussed at the meeting and, more importantly, because the City has not defaulted with respect to any of its obligations set forth in the DLDA.

You will recall that the points of discussion on March 23, 2017, and later articulated in my letter of April 10, 2017, were originally typed on the smart screen in the Mayor’s office, in front of all of us, and sent by email to all attendees the same day. We did so with the express intent of establishing common understanding on the path forward.

All of that being said, and in light of our productive follow up conversations on the project and the June 30, 2017 milespost, I offer the following as a summary of our path forward:

LWLP deliverables form page (3) of your letter of June 1, 2017 ((a) through (e)) are acceptable, proved that:

a. Financial modeling includes a level of detail suitable for analysis of any requested specific dollar number for gap funding” from the State/City as a unified sourced necessary to both start and then complete the single-phase project, using traditional pro-forma methodology with disclosure of all assumptions;

b. Refined site plan is drawn to scale at the conceptual site plan level of detail;

c. Financial commitment includes debt to internal investor equity ratio together with financial plan to establish the required level of certainty for the State;

d. Hyatt agreement includes a date certain for State/City meeting with Hyatt; and

e. Schedule is consistent with the City’s 90% level project schedule for the public improvements.

As you well know your list of City/State Deliverable were not all discussed at the principals meeting on March 23, 2017. Still, I offer the following:

a. Schedule. Please be advised that we anticipate advertising Downtown Crossing Phase 2 in December 2017, with a construction start in March 2018. Kindly forward the LWLPNH schedule and we will develop a master schedule for the two projects.

b. Land Site. I believe you are asking to acquire the entire site as opposed to the Phase 1 acquisition. Either approach would be acceptable, subject, of course, to the satisfaction of the pre-conditions to close as per Section 6.1 of the DLDA.

c. Compensation. There is no DLDA provision for such compensation, nor does the City believe you are entitled to such compensation. The issues withUI have been discussed at length and the City has made its own costly and significant efforts concerning Additional Property pursuant to the DLDA. Although I was no personally involved in the writing of the DLDA, the intent is very clear: there was never any guarantee of Additional Property and there were always minimum build requirements in the DLDA.

The new development program put forth by LWLPNH on March 23, 2017 remains our mutual objective and the d. Development Gap (see below)” is the sole likely source of additional capacity to achieve this program outside of your own debt and equity structure.

d. Development Gap. From the first day Max and I met in early January 2014 through the meeting between Max, the Governor and myself in late February 2014, until the meeting in Montreal in July 2016, we have been working towards the commencement of Downtown Crossing Phase 2, (as well as seeking to secure the Additional Property) and supporting your efforts to close any development gap as per Section 8.2 of the DLDA. You will recall prior efforts to secure $1.5 million through HANAH and to position an application for $8.5 million in CHAMP funding all towards the Affordable Housing.

Now, as the project comes into focus again, we are ready to begin solicitation of additional State DECD or bonding dollars to supplement the debt and equity you can bring to the effort as developers, in order to enable LWLPNH to guarantee commencement of the single-phase market housing, affordable housing, retail, central plaza and hotel with meeting space project that you will be presenting before June 30, 2017. We will, or course, need your documentation of the actual specific number and rationale.

e. City Funding for Public Improvements. Documentation attached from our City Budgets.

f. State Funding for Public Improvements. The City?State Assistance Agreement specifically acknowledges that State financial assistance is leveraging the private investment toward the Coliseum project. The State reserves the right to withhold the construction portion of the $21.5 million grant. The Agreement reads in part, “….DECD funding for this Downtown Crossing Phase II Project may be suspended in case there is either a delay in the progress of the Coliseum Site Redevelopment Project or other milestones referred to in the DLDA project schedule are not accomplished…” The March 23, 2017 meeting, therefore, was a very important milestone for both the City’s project and LWLPNH’s project.

g. Approvals. No plans have been submitted for review. We will, of course, cooperate with you through the process as per Section 5.3 of the DLDA.

h. Two-Way State Street Conversion. On March 23, 2017, you expressed trepidation about activities which would jeopardize an accelerated path to construction as early as the Fall of 2017. We noted that the conversion of George Street to two-way traffic could in fact take significant time to achieve even if it was determined to be feasible. The feasibility analysis, together with a schedule of next steps, will be provided by June 30, 2017, as discussed.

i. Tax Incentives. The site is not in the Enterprise Zone, but hte project would qualify for the City’s Assessment Deferral program at the time a building permit is secured. As you know and as expressly set forth in the DLDA, there is no tax abatement for this project

While many things have changed since late 2013, one thing has not — New Haven is an excellent location for a sophisticated mixed use project anchored by a 4.5 Star brand name full service hotel with adjacent mixed income housing project with unique retail.

June 30, 2017 is the fast-approaching and critical milepost and deadline for you to document and sell’ the inevitability of this project to the Governor’s team. Once the State is satisfied your concept is a certainty, their $21.5m in bonding will be made available, the Orange Street Crossing can go out for bids and our journey will again by moving forward. We are all looking forward to this day.

Please feel free to reach out any time over the next three weeks to discuss and/or refine your presentation for the State.

Sincerely,

Matthew Nemerson
Economic Development Administrator

LWLP’s Response

June 29, 2017
City of New Haven
Office of the Economic Development Administrator
165 Church Street
New Haven, CT 06510

Attention: Mr. Matthew Nemerson, Economic Development Administrator
RE: Coliseum Redevelopment Project

Newman Architects

An earlier version of the LWLP plan.

Matt:

This is in response to your letter of June 14, 2017.

Respectfully, we do not believe it accurately reflects our meeting of March 23, 2017, or the circumstances leading up to such meeting, nor does it address the very serious issues and concerns we raised in our prior meetings, conference calls and letters since July 2016, including those of April 27, 2017 and June 7, 2017. For ease of reference, we will address the assertions set out in your letter in the same order as they appear therein. However, and before so doing, we feel it would be appropriate to reiterate what was stated in our letter to you of March 1, 2017, namely, that all of these exchanges and meetings are being conducted by us on a without prejudice basis, and under reserve of our rights

We continue nonetheless in a good faith effort and are fully committed to continue moving the Project forward even though the plan significantly changed last summer as a result of what you describe as an an impasse” between the City and UI — an impasse which we didn to create, but one which in the end has caused us significant losses, which from our review of your letter, hte City now chooses to completely ignore.

Set out below are some of our specific observations:

• It is to be noted that while we endeavored at our March 23, 2017 meeting with Mayor Harp and Tim Sullivan to maintain our positive spirit” in an effort to keep the Project moving forward, we clearly raised the issue of the need to address compensation to us given the losses (financial) we sustained and would in the future sustain as a result of the UI debacle. We also feel that the dialogue should also focus, although not necessarily center, on how best to deal with such losses in a mutually acceptable manner, while at the same time, permitting the Project to advance;

• When you travelled to Montreal in July 2016 to suddenly inform us of the UI impasse, you in fact mentioned that consideration would be given by the City to compensating us financially for our losses and that Additional Property” on the north side of George Street consisting of those owned by the City and other adjacent properties would be made available as part of a compensation package because we were losing significant revenue generating buildable area due to the newly truncated site. More recently, you indicated that this Additional Property may not be available.

• It is our very strong view that the First Amendment to the DLDA in 2015 created a clear obligation on the part of the City to deliver not only the former Coliseum site as you state, but the Coliseum site inclusive of the land from which the UI transmission lines was to be removed. Even the survey prepared by the City and remitted to us at that time showed the site with the UI lines relocated. We relied on this survey for all of us at that time showed the site with the UI lines relocated. We relied on this survey for all of our drawings, planning, hotel commitments, and investor communication. This should not be ignored. Significant time, resources and planning were dedicated to this concept. It also made the Project more exciting to potential 4 star hotel brands and hotel investors. So as to be clear, the construction of a hotel on the site is fundamental to the City’s agreements with the State and the State’s commitment to fund the significant cost of the DTC‑2 roadwork which is required. Your agreements with UI and the State do not however form part of any commitment or undertaking by us. That being said and for avoidance of doubt, if you provide us with evidence that the City and State intend to proceed forward with the planned funding and construction of DTC‑2 as promised, and that the necessary contracts to perform the work will be issued in that regard without delay, we will of course continue to move forward with the Project as newly conceived;

• Your disappointment regarding the unsatisfactory outcome with UI pales when compared to that which we felt, as so much effort was dedicated to what we believed and so strongly feel was a commitment by the City to deliver the site with UI lines relocated That commitment was relied upon and utilized by us in all of our fundamental market and financial research and all our presentations to the senior Hyatt team and potential investors. The concept we presented is now fundamentally different as a result of the failure to relocate the UI lines. We nonetheless continue to move forward with major commitments and efforts with Hyatt, and are attempting to maintain its interest int eh Project. This has taken time, effort and additional resources. You are quire right when you state at the top of page 2 that despite the UI setback, LWLPNH continued to report forward progress”. That is the way we proceed. Although adversely impacted by the UI setback, we continued and continue to this day in a good faith effort to accommodate the City and to move the Project forward, although this required very significant effort and planning to re-work our prior concepts;

• At the March 23, 2017 meeting we indicated that we were in fact prepared to begin construction on the project provided however all other commitments were in place, including in particular, confirmation being received by us that the necessary City roadwork and other DTC‑2 infrastructure would be funded and promptly started;

• We vigorously disagree with your suggestion that compensation to LWLPNH was not discussed at the meeting. Your meeting record is inaccurate. We recall having specifically raised the issue with you and the Mayor. We are therefore somewhat surprised at the City’s rather cavalier response to what we deeply view as a legitimate claim. Clearly the so called points of discussion” typed on the smart screen did not as far as we are concerned establish a common understanding on the path forward”, as many issues remained unclear and to be resolved, only some which are highlighted above;

• As regards the June 30th milepost”, we reiterate that this date was unilaterally selected and imposed by the State and the City> WE view such date, and have so stated repeatedly that it is unrealistic and artificial. There remain issues to be resolved and clarity and confirmation to be obtained regarding City and State commitments, contributions and work;

• As regards your reference to LWLP deliverables and City/State deliverables, we do not think any useful purpose would be served by addressing each of your comments at this stage, except to say that we do not agree with many of your assumptions or assertions. All of these items require further detailed face-to-face discussions which we believe could lead to mutually acceptable results if all stakeholders work collaboratively, as discussed and agreed with Mike Piscitelli this week.

All of that said, we remain fully committed to the Project and the New Haven community. The City must however assume responsibility for that which is and was its responsibility. The City now has a significant role to play in positively supporting and communicating the inevitability of of this Project to the state, the community, the media and to us. We need to now be re-assured that the city (and State) will meet their future obligations under a modified agreed upon Second Amendment to the DLDA which will be required to cover off on all of the modifications that need to be agreed upon; and which should deal with material City deliverables, i.e., site survey with confirmed land parameters and metes and bounds, City schedule of milestones and commitments, etc. We need to be satisfied that we will nto face any other City or State impediments or obstacles in the future.

Perhaps, the most appropriate way to deal with these outstanding issues is for a meeting to be arranged with Mayor Harp and Tim Sullivan, with whom we have always shared an excellent working relationship. We have scheduled a meeting with Tim Sullivan on July 7, 2017 at 8:30 am in Hartford. It would be very useful if the Mayor accompanied byMike Piscitelli and you could be present. The Project is not only important to the City and State. It is also very important to us. Five (5) years of time, effort and resources, and millions of dollars have been invested.

Mayor Harp, TimSullivan and Mike Piscitelli are copied on this letter. A request is extended to all recipients to confirm that July 7th works for a meeting to be held in new Haven.

We await your prompt response.

Regards,

LIVE WORK LEARN PLAY NEW HAVEN LLP

William Reim

Max Reim

Rony Karam

Nemerson: Where Are Those Projections?

(Note: LWLP and the city did not exchange further emails, at least according to the city’s response to the Freedom of Information Act request, until the following email in January. No other emails were reported exchanged until the two sides arranged the most recent face-to-face meeting in July.)

From: Matthew Nemerson
Sent: Monday, January 29, 2018 7:50 PM
To: Max Reim; Bill Reim
CC: Kiran Marok, Michael Piscitelli; Herbert Neman, Tim Sullivan
Subject: Tim Sullivan leaving CT

Dear Max and Bill,

You are probably aware of this news, but in the small chance that you are not, I wanted to share. New Jersey’s gain is certainly our loss.

We are fortunate that the State’s funding to supplement the City and Federal funding for the Orange Street Crossing (DTC‑2) is secure thanks to Tim’s efforts working with the Governor and Ben Barnes. We remain hopeful that bid documents for the Crossing can go out this Spring, contractors can be selected this Summer and the work will begin in the Fall.

We are still awaiting your projection spreadsheet showing your assumptions for net present value of net revenues to the City (property taxes, building permits) and State (hotel sales taxes) for the next 15 to 20 years from our combined and phased projects so we can begin to calculate the potential for and magnitude of the Tax Increment Funding (TIF).

Once we have some numbers we can begin the delicate process of seeking support for a TIF of a certain size from the Mayor, the community and the Alders. I am hopeful that the State will participate in the TIF by contributing some or all of their Hotel Sales Tax receipts.

You have presented to Tim and myself the great importance to the viability of the project in securing a TIF source of funding. Please, therefore submit your projections very soon. We first requested this document after our meeting with Tim in his office July 7, 2017.

Best,

Matthew Nemerson
Economic Development Administrator
City of New Haven
Mayor Toni N. Harp

Click on the Facebook Live video to watch the full episode of Mayor Monday.” Other topics discussed include her three-day trip to New York to participate in a Harvard/Bloomberg city management class with 40 mayors, deficit-reduction efforts, and city executive management furloughs.

This episode of Mayor Monday” was made possible with the support of Gateway Community College and Berchem Moses P.C.

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